District energy • District energy featu re: Biomass driving down heating costs In 2012, Lithuanian district energy provider AB Kauno Energija embarked originally founded in 1963, present day AB Kauno Energija was formed in 2000 and it is majority-owned by Kaunas City Municipality. The company produces, supplies and distributes heat to consumers in Kaunas and Jurbarkas cities and different settlements in the Kaunas region via a number of separate heating networks. Over five decades the company and networks have grown from just over 8 km to over 450 km. Legislative changes facilitate investment As expected the single largest heat network, over 405 km, is the Kaunas integrated city network. However a unique situation for the municipal utility in Lithuania, indeed perhaps an unusual situation anywhere, is that Kauno Energija does 8 Bioenergy International No 81, 5-2015 not have a monopoly over heat production for this network. In fact until 2012 the company was obligated to purchase at least 80 percent of the heat consumed in the city’s integrated heat network from UAB Kauno termofikacijos elektrinė (KCHP) a 170 MW electric capacity gas-fired combined heat and power plant in the city. In 2012, Kauno Energija produced slightly more than six percent of the heat it supplied to the integrated city network. In addition, over 92 percent of its own heat production used imported fossil gas as fuel. In 2012, Kauno Energija proposed a draft set of rules, reputedly the first of its kind in Europe, which described in great detail the current and planned requirements for the connection of independent heat producers to a district heat supply network as well as the principles, methods and processes for the sale and purchase of heat. The heat purchase obligation with KCHP was subsequently abolished in 2012, though heat is still bought from the company on the open market. Together with changes in national legislation allowing independent heat producers to compete on heat production, favourable conditions for investing in the construction and modernisation of heat production plants emerged. By the end of 2012 three new independent heat suppliers, each having built new biomass fired heat plants, entered the Kaunas heat production market. Kauno Energija too embarked on an ambitious LTL 192.4 million (≈ EUR 56 million) investment programme, partly funded with European Union (EU) structural funds, for the period 2012- 2015. The objective of its programme is to ensure fail-safe heat supply, increase the share of renewables in the company’s heat production to at least 23 percent by 2020, expand the district heat market and its own relative share within it. Biomass heat capacity added By the end of 2014, Kauno Energija had spent some LTL 143 million (≈ EUR 42 million) in numerous network refurbishment and boiler replacement projects, including 72 MW of new biomass heat capacity for the integrated city network. Two new hot-water boilers, 8 MW and 10 MW, with a 4 MW condensing economiser for its Šilkas heat plant, two new 8 MW hot-water boilers and a 4 MW condensing economiser for its Inkaras heat plant, and finally two 12 MW hot water boilers with a 6 MW condensing economiser for its Petrašiūnai power station reconstruction. Together these plants provide the company with the capacity to supply up to 25 percent of the heat demand for this network in an average heating season. Reduced operating costs The results thus far have been significant, radically changing the Kaunas heat market while lowering prices to heat consumers who paid an average of 23.10ct/kWh excluding VAT in 2014. This is a 14.5 percent decrease compared to 2013, placing Kaunas on the second lowest rate in Lithuania in 2014. Last year the company on an ambitious renovation, conversion and expansion investment programme. Celebrating over 50 years of service to Kaunas, the second largest city in Lithuania, the company has managed to reduce consumer prices to amongst the lowest in the country. Changes in national legislation have encouraged increased heat competition and energy efficiency, reduction of distribution losses and a switch to biomass fuel. Photo courtesy Enerstena
Bioenergy no 5 September 2015
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